China's yuan at one-week low; market awaits Sino-US talks, Politburo meet

SHANGHAI, July 29 (Reuters) - China's yuan touched a fresh one-week low against the dollar on Tuesday, pressured by the US currency's broad strength overseas after the US-EU trade deal, while investors anxiously await the outcome of trade talks between Beijing and Washington.

The dollar jumped 1% against a basket of currencies overnight, as France called the US-EU deal a "dark day" for Europe.

President Donald Trump's trade policy and developments around tariff deals with other countries are the key driver of the currency market.

"Regardless of whether the trade partner is an ally (like the EU or Japan) or a strategic competitor (like China), Trump's trade agenda is unified by the common objective to address trade imbalances," Philip Wee, senior FX strategist at DBS, said in a note.

That was likely to include currency realignment to complement tariffs, he added.

The onshore yuan CNY=CFXS slipped to a low of 7.1794 per dollar, its weakest since July 21, before changing hands at 7.1768 by 0355 GMT.

Its offshore counterpart CNH=D3 followed the weakening trend to hit a trough of 7.1839 per dollar, the softest level since July 18. It stood at 7.1793 by 0355 GMT.

Top US and Chinese economic officials met in Stockholm on Monday for more than five hours of talks aimed at resolving longstanding economic disputes in a trade war between the world's top two economies, seeking three more months of truce.

China, initially singled out with tariffs exceeding 100%, has until August 12 to strike a deal with the White House to avoid the return of additional import curbs imposed during tit-for-tat tariff exchanges in April and May.

Prior to the market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 7.1511 per dollar, its weakest since July 21 and 380 pips firmer than a Reuters' estimate.

The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.

Separately, market participants will shift their attention to a Politburo meeting due later this week, which is likely to shape economic policy for the rest of the year, traders said.

LEVELS AT 0355 GMT:

RM:clarence.fernandez.thomsonreuters.com@thomsonreuters.net))